The S&P 500 lost 0.1 percent as a drop in tech offset a gain in energy. Energy stocks rose as Brent futures reached $80 a barrel on worries Iranian exports could drop, further curbing supply in the market. The rise in oil put the Energy Select Sector SPDR exchange-traded fund (XLE) on track for its first 10-day winning streak since 2006.

The Nasdaq shed 0.2 percent.

The benchmark 10-year Treasury note yield broke above 3.1 percent for the first time since 2011, while the two-year yield hovered around its highest levels in a decade.

"Interest rate sensitivity has been the most significant negative factor over this period. Given the substantial repricing of short term interest rates since September this is hardly surprising," Michael Shaoul, chairman and CEO of Marketfield Asset Management, wrote in a note.

Investors have been selling Treasurys amid fears that rising inflation could lead the Federal Reserve to tighten monetary policy faster than the market is expecting.

"There's a tug-of-war between the positives — good economic data, strong earnings and tax cuts — and all the negatives, including geopolitics, higher interest rates and trade talks with China," said Jeff Carbone, managing partner of Cornerstone Financial Partners.

The U.S. and China kicked off the second round of trade talks. U.S. and Chinese officials have indicated that the gap between the two countries is significant, however.

"The U.S. side said they want us to reduce a certain amount of the deficit within a limited time. This is not something a government can do through administrative interference, so I think it's not realistic and not logical," Wei Jianguo, executive deputy director of the China Center for International Economic Exchanges, told CNBC's Eunice Yoon.

Tensions between the U.S. and china have increased in recent months as both countries have hit each other with tariffs targeting some of their exports. The U.S. also banned companies from exporting goods to Chinese tech companies ZTE. Those tensions have sparked worries that the two largest world economies could engage each other in a trade war.

On Sunday, however, President Donald Trump pledged to help ZTE "get back into business, fast," in a sign that tensions may be thawing.

"China will placate the U.S., but how we get there is very complicated and the market has to digest that," said Salvatore Ruscitti, equity specialist at MRB Partners. "If you look at what happened over the weekend, it suggests the negotiations will take some time."